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Consumer Payment Preferences - US - September 2017

Digital payments continue to garner a great deal of attention within the financial services industry, as innovation and technological advancements continue to push them forward. Consumer payment behaviors, however, are fairly engrained within older consumers. Financial services providers have an opportunity to highlight the security and efficiency of new payment processes, especially with younger and emerging generations who have yet to fully establish how they prefer to pay.

This report looks at the following areas:

  • Consumers are resistant to change
  • Credit cards remain most popular, especially for expensive or online purchases
  • P2P has yet to be adopted by a majority of consumers

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Table of contents

  1. Overview

    • What you need to know
      • Definition
      • Executive Summary

        • The issues
          • Consumers are resistant to change
            • Figure 1: Interest in changing current payment methods, by gender, age, and race/ethnicity, June 2017
          • Credit cards remain most popular, especially for expensive or online purchases
            • Figure 2: Preferred payment method by type of purchase, top 3 methods, June 2017
          • P2P has yet to be adopted by a majority of consumers
            • Figure 3: Use of P2P payments, by age, June 2017
          • The opportunities
            • Younger consumers prefer debit, but there’s potential for them to change
              • Figure 4: Preferred payment method for large-ticket items, by payment method preference, June 2017
            • Consumers have shown flexibility in terms of payment card type
              • Figure 5: Use of same credit/debit card for payment, by gender and age, June 2017
            • Customers want to save time at checkout
              • Figure 6: Motivation to switch payment type, June 2017
            • What it means
            • The Market – What You Need to Know

              • Two in three consumers have a credit card
                • Total of noncash payments steadily increases
                  • Personal and household device ownership nears 100%
                    • Consumers continue to adopt mobile shopping habits
                    • Market Breakdown

                      • Total of noncash payments steadily increases
                        • Figure 7: Total number of noncash payments, 2000-2015
                      • Two in three consumers have a credit card
                        • Figure 8: Credit, debit, and prepaid card ownership or usage, May 2017
                      • Monthly debit card use greater than credit card
                        • Figure 9: Credit or debit usage in past 30 days, May 2017
                      • Consumer credit accounts total over $286 million
                        • Figure 10: Total number of consumer credit card accounts, 2012, 2015
                      • Consumer credit outstanding
                        • Figure 11: Outstanding consumer credit (revolving), 2012-2016
                    • Market Factors

                      • Personal and household device ownership nears 100% among internet users
                        • Figure 12: Personal and household device ownership, January 2017
                      • Positive growth in online sales
                        • Figure 13: Total US online retail sales and forecast, 2012-22
                      • Consumers continue to adopt mobile shopping habits
                        • Figure 14: US retail mobile shopping sales and forecast, at current prices, 2014-21
                    • Key Players – What You Need to Know

                      • Visa rolls out “cashless experience” at soccer tournament
                        • clearXchange rebrands as Zelle to compete with PayPal’s Venmo
                          • Send friends money in Apple’s iMessage
                            • Consumers are resistant to change in payments
                            • What’s Working?

                              • Digital wallet competition heats up as Samsung Pay adds Discover
                                • Figure 15: Discover card Samsung Pay email, August 2017
                              • Visa rolls out “cashless experience” at FIFA Confederations Cup 2017
                                • clearXchange rebrands as Zelle to compete with PayPal’s Venmo
                                  • Figure 16: Bank of America “split the bill” email, June 2017
                              • What’s Struggling?

                                • Women considerably less likely to be interested in using their smartphone as a wallet
                                  • Figure 17: Interest in using smartphone as wallet, by age and gender, June 2017
                                  • Figure 18: Wells Fargo credit card acquisition ad, July 2017
                                • Consumers are resistant to change
                                  • Figure 19: Interest in changing current payment methods, by gender, age, and race/ethnicity, June 2017
                              • What’s New and What’s Next?

                                • PayPal introduces 2% cashback card
                                  • Figure 20: PayPal cashback card intro email, June 2017
                                • Order ahead innovation
                                  • Walmart lets customers pick up online orders via vending machine
                                    • Five Guys, McDonald’s mobile order-ahead
                                      • How, then, does this affect the payments industry?
                                        • Curve introduces “Financial Time Travel”
                                          • Send friends money in Apple’s iMessage
                                          • The Consumer – What You Need to Know

                                            • Credit cards remain most popular, especially for expensive or online purchases
                                              • Debit card users utilize credit at same rate for expensive items
                                                • One third of consumers aware of credit/debit rewards structure
                                                  • Overwhelming majority see a continuing need for cash
                                                  • Preferred Payment Methods by Purchase

                                                    • Credit cards remain most popular, especially for expensive or online purchases
                                                      • Figure 21: Preferred payment method by type of purchase, top 3 methods, June 2017
                                                    • Less than 10% of consumers use more unconventional payment methods
                                                      • Figure 22: Preferred payment method by type of purchase, June 2017
                                                    • Younger consumers have not lost preference for debit cards
                                                      • Figure 23: Preferred payment method for everyday items, by age, June 2017
                                                      • Figure 24: Preferred payment method for medium-priced items, by age, June 2017
                                                    • Hispanic consumers prefer debit, regardless of purchase level
                                                      • Debit card users utilize credit at same rate for expensive items
                                                        • Figure 25: Preferred payment method for large-ticket items, by payment method preference, June 2017
                                                    • Favorite Payment Type

                                                      • Credit slides past debit as top payment method
                                                        • Figure 26: Preferred payment type, June 2017
                                                        • Figure 27: Direct mail acquisition from Discover card, August 2017
                                                      • Hispanics and Blacks prefer debit
                                                        • Figure 28: Preferred payment type, by race, June 2017
                                                      • Consumers in rural areas more likely to use debit, cash than in cities
                                                        • Figure 29: Preferred payment type, by geography, June 2017
                                                      • Consumers over 55 the biggest fans of credit
                                                        • Figure 30: Preferred payment type, by age, June 2017
                                                    • Payment Behaviors

                                                      • P2P has yet to reach majority of consumers
                                                          • Figure 31: Use of P2P payments, by age, June 2017
                                                        • Most consumers change up their payment card
                                                          • Figure 32: Use of same credit/debit card for payment, by gender and age, June 2017
                                                        • One third of consumers aware of credit/debit rewards structure
                                                          • Figure 33: Attention paid to credit card rewards structure, June 2017
                                                        • Younger consumers less likely to watch for rewards opportunities
                                                          • Figure 34: Attention paid to credit card rewards structure, by generation, June 2017
                                                      • Mobile or Online Payment Systems

                                                          • Apple Pay most popular mobile wallet
                                                            • Figure 35: Type of mobile payment wallet used, June 2017
                                                          • Consumers are satisfied with current payment methods, but still worry about mobile pay’s security
                                                            • PayPal is the most used online payment program
                                                              • Figure 36: Type of mobile payment checkout system used, June 2017
                                                            • Venmo tops P2P apps
                                                              • Figure 37: Type of P2P apps used, June 2017
                                                            • Higher income-earning consumers are the most likely to use mobile wallets, P2P apps
                                                              • Figure 38: Type of mobile payment wallet used, June 2017
                                                          • Motivation to Switch

                                                            • Discounts and rewards are still top motivators
                                                              • Figure 39: Motivation to switch payment type based on discounts/rewards, June 2017
                                                              • Figure 40: US Bank email, August 2017
                                                            • Ease of use, reassurance of security important to new users
                                                              • Security is a moderate concern, while smartphone use not really a factor
                                                                • Figure 41: Motivation to switch payment type, June 2017
                                                              • Some interest in shortening the checkout process
                                                                • Figure 42: Motivation to switch payment type, June 2017
                                                            • Attitudes toward Payment Methods

                                                              • Overwhelming majority see a continuing need for cash
                                                                • Figure 43: Attitudes on use and necessity of cash, June 2017
                                                              • Less than half of consumers consider mobile pay to be “a hassle”
                                                                • Figure 44: Attitudes on use of mobile payments, June 2017
                                                              • Consumer opinion divided on importance of mobile payment security
                                                                • iGen, Millennials consider online payment systems to be faster
                                                                  • Figure 45: Attitudes on use of online payment providers, by generation, June 2017
                                                                • Hispanics are worried about merchants tracking their spending
                                                                  • Figure 46: Worry about merchant spending tracking, by ethnicity and generation, June 2017
                                                              • Appendix – Data Sources and Abbreviations

                                                                • Data sources
                                                                  • Consumer survey data
                                                                    • Consumer qualitative research
                                                                      • Direct marketing creative
                                                                        • Abbreviations and terms

                                                                        Companies Covered

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                                                                        Consumer Payment Preferences - US - September 2017

                                                                        US $3,995.00 (Excl.Tax)